Roosevelt Institute | Cornell University

Private Prisons: Free Market Solution or Prison Industrial Complex Enabler?

By Jack RobbinsPublished November 11, 2015

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In response to the high crime rates of the 1970's, America began a series of "tough on crime" initiatives that would later be referred to as the War on Drugs. This policy brought about a massive rise in the prison population that has created an overcrowding problem comprobable to the problem it was trying to solve. Prison privatization has arose as a countermeasure to the overcrowding of public prisons and has caused significant controversy in the debate about mass-incarceration. However, private prisons appear to be more cost-effective, higher quality, and have less impact on lobbying than their public counterparts.
By Jack Robbins
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    From Bernie Sanders' call to ban private prisons right now to widespread GOP support for
expanding them, the debate about the legality and efficacy of private prisons is a clear flashpoint for the upcoming presidential race. The issue of mass incarceration and the war on drugs have become significant issues in the presidential race, but outside of Sanders most candidates have ignored the role that private prisons function in shaping these issues.

    Private prisons have grown as a response to record levels of overcrowding and the huge influx of inmates resulting from the War on Drugs. As many media outlets have noted, America's prison population has tripled since 1984 and now stands at almost two million prisoners. The US prison system has been unable to properly house this large quantity of inmates; states like Alabama are operating at a whopping 189% of prison capacity. The impacts of overcrowding are startling. According to the Huffington Post, "the lack of adequate space in California's prisons was causing at least one inmate to ‘needlessly die' every six or seven days." In response, California has been forced to release 1,400 prisoners previously sentenced to life due to violations of the Eighth Amendment.

    Therefore, since overcrowding presents a huge problem to prison policy, it is necessary to evaluate private prisons with respect to how well they ameliorate these harms.

    Private prisons solve the overcrowding problem quite well, as is seen through a comparison between private prison policies and those of state owned prisons. First, states have been cutting their prison capacity quite drastically due to budgetary concerns: 14,100 beds were removed in 2012 alone despite increasing incarceration rates. Meanwhile, private prisons have been rapidly expanding due to their cheaper cost of creation and operation. Adrian Moore of the Reason Policy Institute explains how private prisons achieve cheaper costs: "Private operators and owners of prisons have incentives to make maintenance decisions that save long-run capital costs as well as current operating costs. Private firms can invest today in ways that generate savings over time, while the public sector often has difficulty getting approval or funds for such investments." Furthermore, private prisons create competition between other private companies and the state itself. A ban on private prisons would create more monopolistic price controls, which would result in even more elevated costs. Although there is empirical evidence to the contrary, the academic community seems to conclude that costs are indeed saved: Geoffrey Segal from the Reason Policy Institute found in a meta analysis of 28 prison cost studies that 22 concluded that private prisons are more cost effective.

    Regardless of what the empirical evidence states there are some logical facts that in general make private prisons cheaper. Unlike public prisons, private prisons pay sales and property taxes on their profits which funnel back into state coffers. Moreover, private prisons can be built across state boundaries while public prisons reside within the state. This controls costs as private prisons can be built in places with much cheaper land and friendlier regulatory environments; i.e. a prison built in downtown LA is always going to cost more than one in a New Mexican desert.

    People like Sanders would respond that the only reason private prisons are able to cut costs is that they sacrifice quality. This is a pretty hard question to answer, in part because conditions for inmates in both public and private prisons are so poor in some instances that it is increasingly difficult to decide which one is more preferable. However, again the general consensus seems to be that quality is higher in private prisons. A review conducted by Alexander Volokh of the Stanford Law Review concludes that, the majority of the time, results point to private prisons outscoring public prisons on most quality indicators. Specifically, in a review of 17 studies, Segal finds that 15 of these studies conclude that private prisons have higher quality.

    Private prisons are also crucial to the War on Drugs. Left of center critics argue that private prisons have an incentive for harsh sentencing laws so that more inmates will be created and prisons will increase their profit. Think Progress finds that the largest private prison company, Corrections Corporation of America (CCA) has spent over forty-five million dollars on lobbying for "tough on crime" laws. Yet this criticism falls off when you analyze the comparative: Volokh notes that in Californian public sector prison unions contribute significantly more than private sector lobbying because unions have the same if not greater incentive to pursue mass incarceration policies. In fact, Volokh argues that privatization may well reduce the industry's political power: "Because advocacy is a ‘public good' for the industry, as the number of independent actors increases, the dominant actor's advocacy can decrease (since it no longer captures the full benefit of its advocacy) and the other actors may free ride off the dominant actor' s contribution." Therefore, political capital is probably better spent on campaign finance and lobbying reform than private prisons if the goal is to change sentencing laws.

    Lastly, there are some moral objections to private prisons that are quite troubling. In some cases, it appears that private prisons are created with mandatory minimums for solitary confinement cells. Often times when private prisons get overcrowded these solitary cells are used to hold inmates without just cause, which seems to violate the eighth amendment. In cases of morality it is not sufficient to simply "bite the bullet" and weight the higher overall quality and elimination of prisoner death over unjust use of solitary confinement; it is impossible to compare if someone's Eighth Amendment rights were violated "worse" than another. Therefore, if private prisons should expand due to the aforementioned economic reasons, additional oversight should be put in place (maybe by drastically increasing the frequency and duration of government prison inspections) to ensure that Eighth Amendment rights are protected.


    In the status quo America has a huge incarceration problem. Contrary to popular opinion, the rise of private prisons has not exacerbated this problem but has arisen as a productive consequence that has made prisons cheaper, higher quality, and expansive enough to fight overcrowding. Although Bernie Sanders' claim to "ban private prisons right now" seems convincing on its surface, proper oversight and expansion of the private prison industry is comparatively better and provides a mechanism to lessen the consequences of the War on Drugs.